Investors catch Pokemon GO fever2:06

Pokemon GO has been an overnight success, quickly becoming more popular than many of the world's biggest social media platforms, and driving Nintendo's stock sky high. But is it a fad, or a stayer?

July 12th 2016

3 years ago

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A woman points her smart phone at the Brandenburg Gate as she plays the Pokemon Go mobile game in Berlin this week. Picture: Sophia Kembowski/AFPSource:AFP

POKEMON Go has brought millennials out of the house — and the next step is to get them shopping.

Marketing gurus predict Nintendo’s surprise mobile-gaming sensation will become a powerful engine for retail shops, restaurants and consumer brands, which have long struggled to spark spending habits among younger consumers.

Indeed, Pokemon Go could become a $US1 billion ($1.32 billion) business within a year as local coffee shops, big discounters and fast food chains alike shell out fees to become physical destinations for Pokemaniacs, according to United Entertainment Group.

“This is becoming like a second universe where consumers are more comfortable being marketed to,” says Jarrod Moses, the New York marketing firm’s chief executive.

As much as half of the app’s revenue could eventually come from advertisers, Mr Moses estimates.

As such, Pokemon Go has the potential to out-market the likes of Snapchat, where brands like Gatorade and Taco Bell have persuaded users to take photos of themselves through “lenses” of animated coolers and tacos hundreds of millions of times.

Since Pokemon Go’s launch last week, mobile users are spending twice the amount of time in an average session as they do during an average Snapchat session, according to research firm SimilarWeb.

In a hint of what’s to come, venues from Cinnabon to the Strand Bookstore have beckoned obsessed players on social media with promises they’ll find rare varieties of the animated characters that populate the game.

“It’s a fun and interesting way to market your business to a select demographic,” says Steven Rosenblatt, president of New York-based Foursquare, the location-based discovery app.

“Some are already doing it by offering discounts to players who catch Pokemon there,” he adds, likening Pokemon Go to the check-in features of Foursquare’s real-world Swarm game.

Hoopla over Pokemon’s runaway success has boosted Nintendo’s market capitalisation by more than 30 per cent, to more than $US30 billion ($39.47 billion), since its launch last Wednesday.

The size of Nintendo’s share of Pokemon Go isn’t clear, as it splits ownership with Google — a backer of the game’s creator, Niantic — as well as Tokyo-based Pokemon Co.

Still, some investors see reasons for Nintendo’s run-up to continue.

The Pokemon Go franchise could swell to a $US3 billion ($3.95 billion) business within three years as Nintendo rolls out licensing deals, a movie, a TV show and a slew of action figures and plush toys, according to Mr Moses.

Still, others warn that Pokemon Go and its prospective sponsors face potential hiccups, as the game has also been exploited by criminals to lure robbery victims. Law enforcement officials likewise have urged players not to drive or wander into traffic while playing.

“There’s a huge amount of interest” in Pokemon Go among advertisers, says Mike Gamaroff, senior vice president of channel strategy at Sito Mobile.

But, just as Snapchat faced hurdles over its early reputation as a sexting app, Pokemon Go will likely be forced to ensure the safety of players with registration and user-verification requirements, he said.

“They have a lot of cleaning up to do, a lot of checks and balances to create,” Gamaroff said.

Nintendo’s ADRs, up 55 per cent over the past five trading days, slipped 11 cents on Tuesday, to $US27.59.